the legal basis for the investigationis the Norwegian Gaming Board is tasked with ensuring the Lottery Act is complied with

the relevant section of the Lottery Act that allegedly concerns Lyoness is section 16, which prohibits participation and promotion of “pyramid games and similar systems”

Section 16 of the Norwegian Lottery Act permits the Gaming Board

to request evidence that commissions paid in a suspected scheme were derived from the sale of goods and services and not recruitment

to order a company to rectifying or suspend suspected illegal activity

to impose administrative sanctions on companies that fail to comply

request written confirmation from offenders that stipulate they will cease Lottery Act violations

The Gaming Board stipulates that

anyone who intentionally or negligently violates Section 16 of the Lottery Act may be fined or imprisoned for up to three years.

With respect to the Public Administration Act, the Gaming Board stated it

believes (its) case handling is in accordance with the Public Administration Act’s requirements for sound, independent and impartial case handling.

In its correspondence with Lyoness, the Gaming Board has informed relevant facts and legal issues, which is the basis for assessing whether Lyoness is to be regarded as an illegal pyramid scheme pursuant to Section 16 of the Lottery Act.

Lyoness had also argued that the legal tips received from the public

did not have legal significance (with respect to) assessment of Lyoness’ activities in Norway, in relation to the pyramid provision of the Lottery Act.

Before we get into the Gaming Board’s reply… No, you’re not reading that wrong.

Lyoness is attempting to argue complaints about its pyramid scheme from the Norwegian public are not legal basis enough to launch a regulatory investigation over.

Hardly something you’d expect in response from a legitimate company readily able to demonstrate revenue generation from the sale of goods and services.

In response to the nonsensical claim that tips about Lyoness from the public should be ignored, the Gaming Board claimed its own assessment found

the tips have legal significance.

We have made Lyoness aware that it is the actual business of Lyoness in Norway that is subject to the Gaming Board’s assesment of the company in relation to the pyramid provision of Section 16 of the Lottery Act, and not the international business like the company, objectively speaking, is representing.

In summation, the Gaming Board concludes

Lyoness’ response to the Gaming Board deals mainly with formal and objective explanations of the sales system, which describes in a limited extent how this system works in practice in Norway.

The factual circumstances in the tips submitted to Lyoness for explanation are not contested.

Lyoness also denies liability for any breaches committed by individual participants in the business.

To this end the Gaming Board observes that if it were to be Norwegian participants in Lyoness operating an illegal pyramid scheme in Norway, which the company receives revenues from, then the company could also be held liable for this.

As of October 6th, 2017, the Gaming Board “has not concluded whether Lyoness is an illegal pyramid-like sales system or not”.

The regulator maintains it has been unable to determine “what tangible goods and services” affiliates who pay money to Lyoness receive, and ‘if the value of (any goods and services received) corresponds to the amounts paid’.

If more than 50% of Lyoness’ revenue comes from the replacement of participants and their participant payments and not the sales of goods and services in Norway, the business will be an illegal pyramidal scheme pursuant to section 16 of the Lottery Act.

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